Case 14

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Case 14

drkoop.com

I. CASE ABSTRACT

The case discusses how drkoop.com came into existence and how the Web has started a movement that has fundamentally changed the health care industry. Where medical information once was reserved for those pursuing years of medical training or in expensive and/or hard to get medical resources books, now medical Web sites represent one of the most visited spaces on the World Wide Web. The success of drkoop.com in terms of traffic of visitors and potential future profits has led to an explosion of medical Web sites. A thorough discussion of the drkoop.com case should address the following main concepts:

Why did drkoop.com gain initial success? What can drkoop.com do moving forward to maintain its top position in the medical Web site domain?

Can drkoop.com ultimately achieve profitability going forward?

Decision Date: 1999 1999 Revenues $ 9,000,000

1999 Loss ($34,100,000)

II. CASE ISSUES AND SUBJECTS

Medical Web site

Entrepreneurial Venture

Internet

C. Everett Koop, M.D.

Launched on July 20, 1998

Profit Forecasted in two years

Stages of Corporate

Development

Instant Success

Rated number one medical Web site for first 8 months

Competitive Strategy

Services Offered

Marketing Strategies

Strategic Partnerships

Evaluation and Control

Financial Losses

Industry Analysis

Negative Cash Flows

Managing Technology and Innovation

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Copyright Ð'© 2001 and 2003 by Thomas L. Wheelen and J. David Hunger. Reprinted by our permission only for the Eighth and Ninth Editions of Strategic Management and Business Policy and Cases in Strategic Management.

III. STEPS COVERED IN STRATEGIC DECISION-MAKING PROCESS

(See Figure 1.5 on pages 20 and 21)

O = Emphasized in Case X = Covered in Case

IV. CASE OBJECTIVES

To discuss the establishment of an Internet company

To discuss the financial losses and negative cash flows of drkoop.com

To discuss the use of Dr. C. Everett Koop’s name for the Medical

Web site

To discuss whether drkoop.com should become a financial successful company

To discuss the evolution of a new industry

To discuss the life cycle of drkoop.com

(Case authors included it under Section IV, “Discussion Question.”

To discuss the issue of negative cash flows, which caused the demise of many Internet companies

To discuss the business model of an Internet company and how it differed from the business model of the traditional company

V. SUGGESTED CLASSROOM APPROACHES TO THE CASE

This is a very high interest case for the students.

We suggest the placement of this case in first half of your

course or anywhere you do a segment on the Internet.

This case and Case 13, WingspanBank.com, make a nice two case

package to discuss the Internet business model.

We suggest that you have the students review Chapter 12, “Strategic Issues in Entrepreneurial Venture and Small Business.”

If you want team presentation we suggest the team be limited to three to four students.

It worked well as a team presentation.

Team presentation of their strategic audit using PowerPoint

lasted about 45 minutes.

In class, we find it useful to show a break-even chart and discuss

the losses as negative cash flow.